The Big Idea: An Energy Tax

I had lunch not long ago with a fund-raiser for a prospective presidential candidate. He admitted that his candidate is still looking for a “big idea.”

I won’t say who the candidate is, or even what party he or she belongs to, but I will offer a “big idea” for whoever wants to take it. Since this proposal isn’t inherently liberal or conservative (arguably it’s both), it would work for a Republican or a Democrat, provided he or she has the backbone for it.

So here’s the idea: Create a carbon tax — basically a tax on energy calculated based on its carbon content — and use the new revenue to provide offsetting cuts in the income tax, the payroll tax (the tax on wages used to fund Social Security), or both.

The whole package should be revenue neutral, meaning that it will not increase or decrease the total amount of revenue the government collects. The money will simply come from different sources.

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